Half a Century of Technology Innovation: What’s New for CES 2018?

Next week, nearly 4,000 of the world’s biggest technology companies will converge on Las Vegas for the annual CES show. Now in its 51^st year, the Consumer Electronics Show has seen its pulling power reduced in recent years as big vendors like Google, Apple and Samsung save major announcements for their own events. But it’s still likely to attract something like 170,000 visitors, and is widely seen as a key platform for showcasing new tech products and prototypes that will set the tone for the year ahead.

Here’s a quick rundown of some of the biggest trends to watch out for this year.

TVs: time for 8K

The past year has seen 4K and HDR TVs made widely available, with prices dropping lower all the time. This paves the way for some potentially big 8K announcements this year, with LG already claiming that it will be showing off a new 88-inch set. It will feature a 7680×4320 pixel display a massive 16 times better than the resolution of a standard HD set.

Other technology innovations in the TV space we may see more of are: local dimming features to boost picture quality; lower-priced OLED screens; improved voice control and streaming app support; and potentially some OLED-rivalling Micro LED technology from Samsung.

The smart home gets smarter

TVs comprise just one small part of an increasingly large smart home market, with voice-powered AI assistants from the big hitters like Amazon, Google and Apple increasingly positioned as the glue that holds everything together. Expect a slew of announcements detailing support for Alexa, Google Assistant and Apple’s HomeKit protocol in products as varied as smart clocks, speakers and even video door entry systems. Alexa seems to have the lead at the moment, but Apple is catching up fast thanks to new partnerships, while Google is said to be planning a major presence at the show, having booked out eight hospitality suites.

Keeping it real: VR/AR

Virtual reality might have garnered most of the headlines in recent years, thanks to a slew of eye-catching headsets, but its near neighbour augmented reality (AR) is likely to make a splash at CES 2018. In fact, there’s now a dedicated AR “Marketplace” in one of the Convention Centre halls — proof if any were needed that it’s a technology to watch this year.

Expect to see announcements from the likes of Carl Zeiss, Occipital, Kinmo, Kodak, Royole, Sony, and Netflix, as well as chip giant Qualcomm, which has been building out partnerships with some high-profile headset names such as the Oculus Go. Magic Leap is also a name to watch in the AR space and could well be showing off its new Lightwear headset.

AI everywhere

Also with its own dedicated Marketplace arena, AI will see its profile raised further at this year’s CES with a deluge of new products, from connected cars to voice-activated smart home assistants. Honda will feature the tech in its new 3E Robotics Concept at the show with a range of products designed to advance mobility and make people’s lives better.

Named by Accenture as a top-five trend to watch at CES 2018, AI will feature in a range of announcements from other big names including Chinese search giant Baidu, which will show off its autonomous driving platform Apollo and “conversational AI” platform DuerOS.

by AS

 

Tech Predictions 2018

Every year, our analyst teams come together to identify technology trends they see emerging in the coming 12 months. This is a collection of these across a number of different markets.

PCs
PC sales across Europe are expected to benefit from a return to growth of commercial PCs, driven by faster upgrades to Windows 10 machines across the region and the replacement of an ageing PC base in some countries. PC refreshes will drive growing sales of thin and light ultramobile notebook and hybrid devices, but will also benefit deskbound systems, as a large proportion of commercially installed machines continue to be of this type. Even in 2017, the shift in business desktop sales towards small space-saving form factors presented a growth opportunity, and this is expected to be ongoing in 2018.

Consumer sales are likely to remain challenged as users increasingly hold on to their traditional PCs for a longer period and rely on smartphones for many of their day-to-day tasks. However, sub-segments of this market – including gaming PCs, high-end notebooks and ultramobile devices such as convertible laptops – are expected to continue to grow. While these currently make up a small part of the overall market, they present strong opportunities for revenue and margin growth.

Enterprise Technology
In 2018, cloudification will speed up greatly as services such as IAAS (infrastructure as a service), PAAS (platform as a service) and SAAS (software as a service) are increasingly adopted across the Enterprise sector.

An early consequence, one that has already begun, is a complete redefinition of the traditional market segmentation into server, storage and networking products. As convergence and scalability become increasingly important, enterprise systems will continue their migration from in-house systems to data centres.

Another consequence is the complete change in how products are paid for. In the past, clients purchased individual products with a one-off payment, whereas they are increasingly paying a monthly subscription for cloud licences with, in some cases, the hardware included “for free”.

The huge and increasing success of cloud providers such as Amazon Web services has left us with no doubt about the future of the IT business environment: it is already clear that, within a few years, most processing power (and, as a result, most hardware) will have left the office and migrated entirely to data centres.

Displays
Desktop monitor sales in 2018 are expected to be slower than this year, following PC-demand trends. On the positive side, however, business-targeted monitor sales may benefit from the PC refresh that is expected in the commercial space. Moreover, the rise of esports will continue to drive revenues, especially those from consumer-targeted high-end monitors. The gaming market serves a still-nascent industry, which has significant room to grow and provides a variety of revenue streams. Therefore, more monitor vendors will shift towards this market and offer a larger number of premium models. Increased demand for specialised features like 4K/UHD resolution, higher refresh rates, wide colour gamut and alternative form factors such as large ultra-wide or curved monitors, will increase average sale prices (ASPs) and margin opportunities.

Digital signage will remain a key driver for large-format displays (LFD). Standalone LCD displays will continue to hold the largest market share; however, videowalls and the direct-view LED technology currently used in various public outdoor applications will start to challenge their position. LFD vendors will direct their focus towards other emerging and untapped areas such as industrial manufacturing and BFSI*, and continue to compete in already thriving markets including the retail space – where LFDs enhance customer experience – as well as the education and corporate arenas. Increased competition between vendors and a greater variety of LFDs will result in more affordable pricing and continue to spur volume sales.
*banking, financial services and insurance

Imaging
Printer hardware sales are expected to contract overall although, due to the ongoing shift towards multifunction and colour devices, some segments are expected to grow in 2018 including multifunction colour laser printers and, at a slower pace, high-capacity business inkjets.

Consolidation in the market and the transition towards a contractual business model continues, so unified platforms, security, digitisation, customisation and automation of those processes via services and solutions hold plenty of opportunities for vendors and their business partners to grow by adding value for their customers and increasing their productivity and efficiency.

In 2017, we’ve seen most vendors refresh their product portfolios and introduce even more reliable, secure devices that use various new technologies and offer lower cost of ownership and higher print speeds. Vendors continue to increase their focus on engaging with channel partners to target SMBs. HP’s acquisition of Samsung’s printing business is now complete and the company has started shipping its new A3 products. It is expected that sales of these will accelerate and increase competition in the A3 copier market – a space to watch in 2018.

3D Printing
Industrial space
HP will lead the way in seeing if industrial 3D printing of plastics can turn the same corner as metal 3D printing: away from being used just for prototyping and into manufacturing. HP is also to introduce a new technology in 2018 through which it will begin to set its sights on metal 3D printing.

As the other new kid on the block, the very visible and recognisable brand GE continues to gain share and will help push 3D printing even more into the mainstream and grow the market. GE acquired two of the top companies making industrial metal 3D printers last year and will carry on championing the technology internally as well as sell their printers to others. Their use of metal 3D Printing to make real jet engine parts continues to be the “poster child” demonstrating how 3D printing can disrupt supply chains and the $12T global manufacturing market. In 2018, they will push the boundaries further in aerospace as well as in the automotive and healthcare industries.

After seeing fewer printers ship worldwide each year for the last few years, the industrial side of the market will move back into growth thanks to new technologies (such as from Carbon) and big brands (HP, GE, Deloitte, etc.).

During 2018, we will see the emergence of a new class of low-end industrial metal 3D printing machines. While these are, of course, not for the masses (“low-end” in this context still means ~$150k), this new class includes $1M machines that will allow more companies to experiment with 3D printing in ways that were previously out of reach for most of them.

Desktop space
While they have not yet become a “consumer” good, desktop 3D printers have continued the unfettered growth in shipments that has been seen since the market began – it is projected to reach +39% by the end of 2017 and to continue into next year. Familiar brands, such as Kodak and Polaroid, will come to market in some regions, but this side of the market will continue to be dominated by companies like Monoprice, XYZprinting, Ultimaker and Formlabs that have a strong presence in 3D printing but are mostly unknown outside the sector.

This class of products has traditionally been defined simply as printers selling below $5K. However, growth in this sector means further refinement and stratification is needed to follow the market and the $2,500 barrier is now used to define this low end. In 2017, a new professional space emerged containing products in the $2,500 to $20,000 range (consisting of both higher-end desktop 3D printers and lower-end industrial printers). During the first half of 2017, this class grew by 64% and strong growth is also projected for 2018.

Virtual Reality & Gaming
Gaming looks to continue its healthy growth next year, with help from spectator-friendly formats such as streaming and esports – both of which provide sponsorship opportunities –gaining mind share among younger tech-savvy consumers. The recent upset over microtransactions, brought to a head by EA’s mis-steps on Star Wars Battlefront II, are symptomatic of gamers’ growing unrest about business practices they perceive as predatory, so expect rebalancing in 2018. This is unlikely to significantly depress profits but may, in the long term, lead to a healthier gaming ecosystem.

The push for 4K gaming consoles is likely to encourage an increased focus on the same potential in gaming desktop PCs, driving both display and GPU sales. Meanwhile, the recent surprise collaboration between Intel and AMD to produce integrated chips with high-end graphics capabilities feeds well into the already growing gaming laptop market, so expect the emergence of more thin, light and powerful laptops targeted at gamers.

On the VR front, 2017 ends with many new contenders entering the market and established brands teasing new hardware and this means 2018 will be a year of fragmentation for VR in the west. Whether any of these will catch the attention of the mainstream will depend on various factors, although Oculus’s imminent, lower-priced, Go is likely to be a firm favourite. As prices for high-end headsets fall and more big budget games are released, gamers are finding it increasingly easy to justify VR purchases. With luck, this will fuel a virtuous circle for both consumers and content producers.

Also, expect to see a steady flow of interesting bespoke enterprise VR applications next year, but don’t hold your breath for a single stand-out business headset or killer application – unless Magic Leap’s mysterious headset manages to make it to market and live up to the promises and hype.

Retail
Mobility will continue to gain importance and be a key success factor for retailers. Current estimates indicate that more than 50% of purchases involve the customer using a mobile phone for search, research or purchase. With online activity continuing to rise, retailers must optimise their websites for mobile in order to engage consumers early and often in their purchase journey.

Consumer expectations for omnichannel options continue to rise. The fastest-growing retail option is click to purchase and collect in store. Click and collect now accounts for more than 30% of sales in many stores, and is rising across retail in Europe. A critical success factor is the accuracy and efficiency of the collection process, with more stores having dedicated collection areas. More retailers will also collaborate with distributors for drop shipments in order to extend product range, and enable fulfilment to travel the last mile to the customer’s door.

Retailers are making up for declining unit volume sales through selling more premium devices: gaming PCs, 2-in-1 notebooks and ultramobile notebooks. A key to selling a premium mix is leveraging stores to create an experience consumers cannot get online. Successful retailers are moving beyond products and selling a larger, more profitable market basket by focusing on solutions and services that are not available online.

Will the rapidly falling price of VR lead to mass adoption?

One of the biggest stories for VR in 2017 has been the significant reduction in price for VR headsets. Possibly spurred on by Microsoft’s Windows Mixed Reality headsets attempt to undercut the Rift, Oculus dropped the price of its headset with touch controllers from $600 to $400 for its “Summer of Rift” campaign. This is much closer to the initial price point that Oculus’s founder Palmer Luckey suggested the commercial headset would retail for and results so far indicate that units have been flying as a result. With CONTEXT’s 2017 VR Research Group survey indicating that the cost of the headset is still a major deterrent for 45.4% of respondents, 38.1% of gamers would spend $400 or more on a VR headset, compared to only 11% willing to spend over $600.

The other major barriers with regards to cost are those associated with buying a PC powerful enough to run VR games to an acceptable level. Road To VR reports that Wallmart will be selling a comfortably “VR Ready” HP Pavilion Power Desktop with GTX 1060 graphics card for $500 as a part of their Black Friday promotions. For the first time it will be possible to buy a fully VR capable solution with PC and headset for under $1,000 which is considered a sweet spot for gamers and a long way below the $2,500 figure widely acknowledges to be the minimum investment for VR only a couple of short years ago.

On the console front as well, a PS4 and PSVR was available for $200 from selected retailers on Black Friday, down from $399 normally. Combined with a strong line up of PSVR exclusives, this may enable Sony to maintain or even grow their already substantial lead in the high-end tethered VR headset market.

The question remains as to whether these price drops will be enough to drive mass adoption in Q4. While it is likely that the install base will benefit dramatically from falling prices, which will be encouraging to developers and others with a stake in the industry, there are still a few barriers to VR hitting its inflection point.

Interest in VR among non gamers is growing, but not nearly as quickly as some had hoped. While there are undoubtedly many uses for VR both seriously and as a general entertainment medium, it is clearly gamers who show the strongest interest in the technology for now. Only 4.8% of UK gamers think VR is a gimmick compared to 30.2% of non-gamers (down from 48.3% last year) suggesting that this demographic will be the easiest to target in the short term.

Still, while the potential for gaming in VR is widely acknowledged, many gamers are still waiting for the technology to improve. 61.9% would like to see higher resolution headsets, 74.5% would like to see “better quality content overall” and 51.3% said “one really exciting big budget game” would increase their interest in buying a VR headset.

Will Q4 see the stars align for VR to start seeing significant market penetration and finally create the virtuous cycle required to fuel this exciting new industry? Only time will tell, but here at CONTEXT, we’ll be watching the data come through with bated breath for the first signs of that mythical inflection point.

by BB

IFA 2017: The Smart Home Comes of Age

CES and MWC may attract the bigger crowds early in the year, but for many, the original and best consumer electronics show remains IFA. The Internationale Funkausstellung Berlin – to give it its full name – has been around for nearly a century, but it can barely have witnessed technological change on quite this scale before. This year VR headsets vied for attention with the usual smartphones, gaming devices, and laptops.

But perhaps the biggest buzz could be found around the smart home, in the proliferation of connected appliances and voice assistant technology, as well as a new agreement behind the scenes designed to drive forward a global market said to be worth over $14bn.

Gadgets galore
As usual, all the major consumer brands were represented this year, from Samsung and Huawei to Sony, Asus, Acer, Panasonic and many more. Smartphone fans were treated to a first look at LG’s high-end V30 device, while Sony unveiled three new models: the Xperia X71, X71 Compact and XA1 Plus. As far as laptops, the Asus 2-in- 1 ZenBook Flip 14, Lenovo’s Yoga 920 ultra-thin notebook, and Acer’s “slimmest ever all-in- on desktop” the Aspire S24 all caught the eye.

VR fans were treated to a major announcement: the introduction of Microsoft’s Windows Mixed Reality headsets, with partners Acer, Asus, Dell, Lenovo and others all showing off their wares. Elsewhere there were new smart watches from Samsung, plenty to keep gaming fans interested, and even new 360-degree digital cameras from Acer.

But it was in the smart home that arguably the most eye-catching kit could be found, as the battle for consumer hearts and minds really begins to heat up. There were plenty of connected appliances on show, from a new Nest thermostat and Hive smart security camera to the Miele Dialog Oven and even a smart floor cleaner from Neato Botvac.

But notably it was in the virtual assistant space that vendors really vied for consumers’ attention, which isn’t surprising given that these platforms will increasingly sit at the centre of the smart home.

That’s why we saw Amazon’s Alexa, Microsoft’s Cortana, Google’s Voice Assistant and Samsung’s Bixby, built into an increasingly wide range of products on show at IFA. Lenovo’s Alexa-powered Home Assistant for the Tab 4 offers an Echo Show experience for a much smaller price tag, for example. There’s also been signs that some players are prepared to work together: Amazon and Microsoft announced that their voice assistants would integrate to allow users to access Windows and Office through Alexa and Amazon sites via Cortana.

Driving smart home success
Behind the scenes was perhaps where the most significant event at IFA 2017 took place, with the signing of a major agreement between three smart home associations in the UK, Germany and France.

The UK’s Smart Homes & Buildings Association (SH&BA), Germany’s SmartHome Initiative Deutschland e.V. (SHD) and the Fédération Française de Domotique (FFD) represent over 600 OEMs, retailers, distributors, ISVs, integrators, telcos, and energy suppliers. Under the terms of the new agreement, they’ll form a European committee to better coordinate joint activities.

As Global MD for CONTEXT and Chair of the SH&BA, I believe the deal will help the organisations share key knowledge, develop common standards and drive sales. As smart home technologies become increasingly important to us all, that’s great news for the industry, and ultimately consumers.

by AS

 

Immersive Technology in the Workplace – Part Two: Automotive and Aerospace Industries

In this second post in a series of blogs, we are looking at Immersive Technology, the blanket term for virtual, augmented and mixed reality and associated techniques and specifically where it is currently being used in the workplace.

In the last part, we looked at how this technology is being used in Healthcare. This time we’ll be looking at the engineering sector, specifically as it relates to Automotive and Aerospace.

Design

Even from the earliest concept stages, VR sketching tools allow designers to visualise their creations at full scale in interactive and collaborative environments, even with remote colleagues, as demonstrated recently by Seymourpowell.

The real power of immersive technology is that it gives designers and technicians all of the same advantages that other digital tools offer, but allows them to interact with projects spatially and at the scales they are used to from traditional prototyping techniques.

Production

Collaborative production planning via virtual environments also allow certain classes of issues to be spotted early, as demonstrated by Lockheed Martin who were “seeing a significantly reduced error rate in the construction stage”. Even NASA is well documented as having promoted the use of VR to share work and “break down the barriers of understanding”.

The high tech engineering sector has also taken readily to incorporating immersive technologies into the production work flow. Volkswagen for example, recently announced partnerships with HTC for workers to collaborate on both production and logistics via virtual reality to “make daily teamwork much easier and save a great deal of time”.

Meanwhile, Ford has been using virtual manufacturing technology to analyse assembly line workflows via its ergonomics lab. This has reportedly seen employee injuries be reduced by 70% and ergonomic issues lowered by 90%.

Maintenance

Much like we mentioned last week in the medical industry, visualising a complicated, three dimensional piece of machinery clearly can be difficult on a two dimensional screen. With virtual reality, however, inspecting complex systems and communicating with colleagues about those systems becomes much easier.

While not a commercial application, upcoming game prototype Wrench illustrates perfectly how useful interactive visualisations are in communicating how a complex product is assembled. For a more industrial example, look no further than ESI Group’s IC.IDO, who work with some of the largest aircraft manufacturers in the world.

Training maintenance technicians in virtual reality will encourage much better process adherence and understanding, reducing maintenance costs in the long run. Furthermore, as illustrated brilliantly in Microsoft’s promotional videos for the Hololense, the ability to have a maintenance professional remotely assist an unskilled on-site worker or end customer will allow those experts to work remotely and maximise their effectiveness.

Conclusion

It seems clear that large engineering companies are taking immersive technology seriously and seeing promising results across the scope of their business. Many of these techniques and others will also be relevant to other industries, including the ability to showcase products virtually, both in B2B and B2C settings. While this is clearly an attractive proposition for the aerospace and automotive industries, we will look at this in more detail in part three, Architecture and Real Estate.

by BB

*Photo Credits: Shutterstock.com & Editorial credit: Darren Brode / Shutterstock.com

 

 

 

Immersive Technology in the Workplace – Part One: Healthcare

At CONTEXT, in addition to providing world class data and insight into well established, multi billion dollar technology industries, we are also constantly looking to the future and keeping an eye on new emerging industries. In this series of blog posts we’ll be looking at Immersive Technology, the blanket term for virtual, augmented and mixed reality and associated techniques and specifically where it is currently being used in the workplace.

Our first industry in which immersive training is already gaining ground and may well be a game changer is Healthcare.

Surgical Training

Immersive technologies are already working their way into the medical training environment. Medical Realities was the first to allow medical students to experience the practical realities of an operating theatre from the perspective of the surgeon via spherical video but many others are hot on their heels.

There is an expression in surgery that for rare procedures the process is often to “watch one, do one, teach one”, highlighting the fact that it is difficult to practice such activities without a certain amount of risk to patients.

In an environment where risk and liability plays a major role, any technology which allows doctors to plan and practice a technique to perfection will be warmly welcomed by the medical industry, assuming that it is able to pass the necessary regulatory hurdles.

Medical Device Integration

It is not just surgeons who will benefit from training in VR. Any specialised medical device requires strict adherence to designated procedures, the communication of which is extremely well suited to virtual reality. Rolling out new devices and procedures is no easy feat, but a fully simulated environment allows for staff to be brought up to speed as new technology is integrated into their daily workflow.

Virtamed and others are already providing physicians with the ability to practice certain device usage techniques via VR and we are likely to see more device manufacturers offering virtual training solutions in an effort to secure vital contracts.

Visualisation

Beyond training applications, there are increasingly sophisticated technologies for capturing rich, three dimensional patient data. As in many other industries, being able to visualise and interact with three-dimensional information makes it far easier to digest, both to the specialist and the layman.

Immersive technology not only allows medical professionals to better inspect a patient’s unique set of circumstances, but also to better communicate details to other members of the care team and even to the patient themselves.

For now, the use of headsets is likely to be limited in this use case, but as the form factor and capabilities of augmented reality devices improves, expect to see them replace many of the traditional props doctors use to explain conditions and treatments.

Conclusion

We’ve focused on a few ways professionals will use immersive tech and it seems more use cases will be identified as the technology develops. We’ve not even touched on therapeutic patient experiences like those from psious, Virtually Better and Bravemind which aid in the rehabilitation from anxiety, phobias, PTSD and other mental health issues.

It is clear that healthcare has been one of the first industries to open its arms to immersive technology, ripe as it is to disruption anywhere that costs and risks can be reduced while improving effective outcomes.

In the next part, we’ll look at how Immersive Technology is being used in the Automotive and Aerospace Industries.

by BB

Apple’s Public Secret: Macs and PC Gaming

For those financial analysts who took the time to comb through Apple’s fiscal fourth quarter results last year, it was noted that despite overall declines, Apple Services – the division which includes Apple Music, Apple Pay, and the App Store – posted very healthy growth of 24% up to $6.3 billion. If this growth continues the Services division is on track to become a Fortune 100 company in its own right later this year. A decent proportion of that revenue will come from mobile games. It’s fair to say that mobile gaming has a far wider market reach than console or PC, partly due to cost and accessibility; the success of apps like Angry Birds and Pokémon GO are a testament to its appeal. Indeed, mobile gaming is generally seen as socially more acceptable than PC or console gaming, which still has a reputation (at least in many European countries) as being the preserve of the youth and hobbyists where a much larger financial commitment is required.

Despite the importance of gaming to the mobile platform, and increasingly to the stagnating PC market, Apple has resisted overtly marketing towards gamers, instead leaving that up to individual app studios. This is understandable for a brand which positions itself as luxury/lifestyle, the technical equivalent to a designer fashion label, allowing for Apple products to perpetually command high ASPs. Just as the iPhone/iPad is now the gaming platform of choice for many consumers, Macs can be considered a PC gaming alternative. According to the latest survey from Valve’s Steam cloud gaming platform – the most important global online shop for PC games – Mac OSX now makes up 3% of all users, with 50% of those users being Macbook Pro owners. Back in 2015 Valve stated that Steam had over 125 million players, meaning that even two years ago there were 3.75m Mac OS gamers on their platform alone. Looking further into Steam’s data, the top selling games for Mac OSX include all of the world’s biggest eSports titles such as Dota 2 and Counter-Strike: Global Offensive.

A common question repeatedly asked by channel and vendor partners is why CONTEXT includes Macs as part of the PC gaming market. The simple answer is that when the PC market is segmented according to what is gaming capable based upon system specs, Macs are part of the gaming market. At the low-end of the market, Apple has a healthy share thanks to the high number of iMacs utilising the AMD Radeon R9 M390 and similar GPUs. This configuration will not allow for full GFX settings on many AAA game titles, however it will still run popular games with acceptable framerates. Thanks to Apple’s announcement in early June that high-end VR-ready GPUs would soon be available either as a tethered add-on or as a standard system spec, Macs will be better equipped to compete in the enthusiast-end of the PC gaming market. In the case of the Thunderbolt 3 external GPU, this allows for a VR-ready upgrade at $599. This might seem steep given that AMD’s Radeon RX 580 retails for $300, however $599 is still cheaper than buying a new VR-ready notebook, and the dev kit also comes with a $100 discount on the HTC Vive.

In the fashion world, high-end products are sometimes adopted by a non-target market – the story of Burberry’s clothing in the UK is a good example – and PCs have a history of being co-opted for purposes beyond the vendor intention. In the end, consumers will always have the final say on how they want to use a technology; as the Apple Services financials show, a vendor may wish to keep their success a public secret.

by JW

Window Shopping and Shopping on Windows

A running theme over the last few years in business news in the US and elsewhere is the terminal decline of the physical retail store. Many of the big name chains once thought of as bastions of the high street have fallen victim to the online juggernauts, on what seems like a weekly basis. The finger of blame is most often pointed at Amazon, whose profits continue to soar to such extents that some financial analysts are now claiming that their share price is overvalued and based upon forecasted earnings of massive proportions.

It is possible that President Trump may attempt to curtail Amazon’s growth through trust-busting legislation – something which could be motivated by his feud with The Washington Post and its owner/Amazon exec Jeff Bezos – however there is little legal ground to challenge the etailer simply because their business model and disruptive technology offers a better deal for consumers as things currently stand. It’s true that few retailers can take on Amazon based on pure pricing, however there are still assets which Amazon does not yet have: a large high-street presence and refined customer service.

I was speaking to a colleague recently whose wife works as a beauty consultant in London’s West End. She was upset that although their footfall was good and plenty of customers wanted to try out products, very few actually bought anything, and many could be seen price-checking and purchasing on Amazon before they even left the store. Let’s be honest: many of us do this every time we shop. Her general feeling was that they shouldn’t even bother stocking anything in-store. This remark was borne of bitter resignation, but some retailers have done exactly that, using a sophisticated omnichannel model to remove the need for significant store inventory.

There are certain categories where consumers will always want to try products in person, and which if prove unsatisfactory can result in a glut of expensive return logistics. Clothing and fashion is an obvious candidate; US brand Bonobos recently posted a $60m increase in revenue over the past five years, driven by their Guideshop setup. Consumers visit physical stores to see the new lines, try on clothing, then pay to have clothes delivered when and where they wish. The store itself does not hold large stock or inventory. Bonobos’ system challenges the assumption that most consumers want to leave with the product in hand, and has allowed them to reinvest logistical savings in staff training and a high service-level.

This phenomenon is also seeing green shoots for technology sales, with showroom setups such as London’s Sandbox offering hands-on experience with new categories including VR. Like Bonobos, Sandbox’s function is to give consumers the chance to try room-scale VR, something Context’s 2016 VR consumer survey showed to be a key factor in purchasing VR. At this stage in the category’s lifecycle relatively few consumers have tried room-scale VR, and would therefore be unwilling to part with the daunting initial upfront cost.

These kinds of demonstrations are arguably more important for VR marketing than traditional advertising. VR can be a revelatory experience, but selling it to someone who has never tried it is an uphill struggle. It is also fair to say that many consumers shop online to avoid feeling pressured by a salesperson, and at present very few retailers can offer truly excellent face-to-face customer service. By removing the onus of making the purchase then and there, and potentially allowing for price reductions to compete with Amazon, Bonobos’ solution, or a modified omnichannel setup could be the saviour of the high street, not to mention a huge boom time for the distribution channel and drop shipments.

The art of window-dressing has a long and proud history, once a place of hubris for serious-minded shop attendants and source of satire for comedians, but now the whole store offers a window into (Microsoft) Windows.

by JW

Peddle Faster to Fly Your Unicorn: Could VSports Cause Unintentional Fitness?

In three decades of video gaming there have been some very odd on-screen instructions. The Grand Theft Auto series introduced a controversial healing mechanic, and in PS3’s 2010 title Heavy Rain players were encouraged to “press x to Jason [sic]”, however being instructed to pedal in order to start your unicorn must now be a close contender. It’s also fair to say that very few eSports or sit-down video games will draw much more than nervous perspiration, or perhaps the dreaded Nintendo Thumb some of us used to suffer when attempting to finish seemingly impossible titles like Battletoads (which if played with two players was actually impossible). The Nintendo Wii was the first mass-market gaming platform to show the potential for video games to help users truly exercise, and the motion controllers and uses beyond sedentary gaming were a major selling-point over seemingly superior competing products. The majority of users eventually grew to see the Wii Fit as a novelty workout video with interaction, and slowly consoles were retired in garages, ignored and eventually abandoned like so many gym memberships. Few of those Wii Fit owners have looked back since.

As the VR industry has grown over the last two years a new form of exercise has emerged – Vsports. In this instance, the user is immersed in a 360 degree 3D world, transforming a session on an exercise machine into a totally different experience. Often complaints of reluctant joggers is that running through the streets of Balham is hardly exciting, and thudding on a treadmill whilst watching Simon Cowell’s latest autotuned starlet in the gym is drastically worse. What about running along the banks of the River Tiber whilst chasing rogue legionnaires, or indeed, flying a pedal-powered unicorn? The latter has been made possible by VirZOOM, a company so sure of its product that they are targeting their marketing directly at lapsed gym bunnies. My own aversion to jogging is the lack of competition and the abstract nature of lonely cardio exercise, however a gameplay element and opponents, both virtual and real, will push me the extra mile. Interestingly, in a 2016 CONTEXT survey of EU consumers, sport was the gaming category which excited them the most for VR, with 1 in 5 respondents expressing an interest; this could now mean sport in a very physically-active sense.

For those of us in the ICT industry who have been lucky enough to try VSports at events such as CES, general consensus is that this could be a big category for VR, both at home and in larger installations. As an analyst, I am frequently asked where the opportunities for VR lie for the channel, and VSports offer both a B2B and consumer market. Health technology is persistently strong in terms of sales, and the industry is accustomed to disruptive technology and wearables. Moreover, gyms have long been a customer of AV installers and resellers: almost all gyms contain dozens of TVs and LFDs. The sanitary aspect of VR headsets has not been missed by start-ups, with companies such as VR Cover popping up to sell washable VR peripherals.

Perhaps the most interesting example of the convergence of games, VR, and VSports is the phenomenon of accidental exercise. My own serendipitous encounter with VSport was whilst playing Knockout League on the Oculus Rift/Touch recently. After over an hour of shadow boxing I removed my headset to discover the sort of sweat I’d expect after a 5km run. I’m not the only industry professional to accidentally work out during a normal gaming session: Job Stauffer, Telltale’s head of creative communications recently announced that he’d lost over 50lb playing a VR game, in this case Sandboxing. For those of you in the channel who have routes to the healthcare verticals and are also lucky enough to be distributors or resellers of one of the high-end VR HMDs, my advice is to start some serious conversations about the new categories of VR Fitness Devices and Accessories.

by JW

How PC Gaming Is Driving AI, Cars, and the UK Treasury’s Technology Policy

At CES 2017 back in January, Jen-Hsun Huang, CEO of Nvidia announced that “GPU-powered deep learning is driving the ability for computers to perceive the world… But one day, AI researchers met the GPU and the big bang of AI occurred.” Up until more recently, when most ICT analysts thought of Nvidia, the first thing to come to mind would have been gaming, and for a good reason. The core of Nvidia’s business is still PC Gaming where they continue to dominate the GFX hardware market. Jen-Hsun went on to explain that the “GPU had the benefit of being fuelled by the largest entertainment industry in the world, video games.” Indeed, PC gaming is one of the most processing-intensive activities a PC can be asked to perform, and that industry has gone from strength to strength over the past few years. Jen-Hsun was right to tout the success of PC gaming: CONTEXT’s data shows that sales of high-end VR-ready PCs shot up 1057% in terms of revenue y/y for the top 6 EU economies in Q4 2016, and figures from the Entertainment Retailers Association put gaming as contributing more to the UK economy in 2016 than either music or video sales at £2.96bn.

Several thousand miles away from Sin City, the importance of AI and driverless cars was being carefully noted by strategists and civil servants in Whitehall, culminating in the most recent budget announcement. The British government has promised £270m in funding for disruptive technologies such as driverless cars, AI, and robotics. Given the current hard-Brexit policies being pursued by Teresa May’s administration they are wise to support such green shoots; CONTEXT’s figures for professional GPUs back both this decision and Jen-Hsun’s assertion. Sales of professional GPUs in the UK reversed a previous decline in Q3 2016, with Nvidia’s own Quadro series of GFX cards enjoying +25% y/y growth in revenue. More and more GPUs are being purchased to power deep learning and AI for large datacentres, rather than in their more traditional roles for 3D modelling and computer aided design.

It’s not uncommon for devices to be developed with one purpose in mind then being very successfully appropriated for another. Even Atari’s failed Jaguar gaming console ended up being cannibalised and used in dental equipment. The GPU is also the critical lynchpin of another emerging technology: Virtual Reality. In one profound statement, Jen-Hsun declared that “…all gaming was Virtual Reality,” and in many cases this rings true where a player inhabits a virtual world. It might not seem immediately obvious, but components built for PC gaming now power both AI and VR. As a result Nvidia’s share price has soared in recent months, finishing 2016 +224% up from the previous year, and promising to continue to rise as their partnerships and new ventures bear fruit, with professional visualization growing +11%, datacentre at +144% and automotive up +52% for Q4 2016.

This success eventually caused Nvidia’s shares to drop in February when the Q4 results were released as investors weighed up the risks of long-term returns (as driverless cars are still many years away from being commonplace), versus selling stock at an apex. To some extent, the UK government is taking a gamble on driverless cars becoming the norm, and this might reflect the modest £270 sum compared with much higher investment promised by other governments. Academic commentators have also welcomed this news due to the environmental benefits promised by AI-driven vehicles. The immediate future of AI and its importance to the UK economy is very encouraging, but much like Brexit, the longer-term outlook is beyond the most complex algorithm to accurately portend.

by JW